By Catie Low
Temple and Webster is shutting down the high-profile Milan Direct online store, closing its Melbourne office and integrating its signature collection of designer replicas into its eponymous online store by the end of the month.
The brand won't disappear instead it will be transformed into a "permanent private label" line on Temple & Webster's online store. However, there will be a sales impact, according to chief executive Mark Coulter.
Milan Direct's Dean Ramler will move up to Sydney after Temple & Webster announced plans to integrate the business.Credit: Wayne Taylor
Temple & Webster paid $20 million for Milan Direct in late 2015 and Mr Coulter is optimistic the sales pain will shortlived given that the entire Milan Direct collection will be sold through the Temple & Webster site.
"This plan focuses on building Temple & Webster into a dominant brand in the furniture and homewares category online and the first place Australians turn to in when shopping for their homes," Mr Coulter said.
"Moving Milan Direct's private label range and product sourcing and private label capabilities to sit under the Temple & Webster platform is the natural next step for the group.
"We anticipate that most of Milan Direct's revenues will transition to the Temple & Webster platform given that we will be migrating the entire Milan Direct private label range to the site," Mr Coulter said.
Temple & Webster said the merger of the Australian arm of the US business Wayfair, which it paid $6 million to acquire last year and rebranded ZIZO, had been a "tremendous success" and its flagship site was trading up compared with the combined result of the two separate sites year on year.
Temple & Webster's losses were running at as much as $800,000 a month in October but Mr Coulter said the monthly burn rate was falling month on month and the business was still committed to hitting break-even in calendar 2018 as set out in the float prospectus.
Temple & Webster's share price has plunged from 85¢ a year ago to just 13¢ after it reported a statutory full year loss of $44 million, more than double the forecast $18.5 million from its float prospectus.
Retail Doctor Group's Brian Walker said the integration of Milan Direct into Temple & Webster was all about improving processes and achieving supply channel efficiencies for the business.
"This move reduces their investment in separate brands and their data must be telling them that the same customers are visiting both sites," Mr Walker said.
"This is all about improving the profitability of sales and their thinking is one of survival."
This is all about improving the profitability of sales and their thinking is one of survival.
Retail Doctor Group's Brian Walker
Key Milan Direct staff, including Dean Ramler who founded the business along with Ruslan Kogan will move up to Temple & Webster in Sydney.
Mr Ramler said he joined Temple & Webster to help build the dominant online retailer and "I'm glad to say we're well on the way to achieving that".